A longitudinal assessment of intellectual capital of companies listed on malawi stock exchange

European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.6, No.9, 2014
27
A Longitudinal Assessment of Intellectual Capital of Companies
Listed on Malawi Stock Exchange
Andrew Munthopa Lipunga
Department of Accountancy, University of Malawi - The Polytechnic
Private Bag 303, Chichiri, Blantyre 3, Malawi
E-mail: alipunga@poly.ac.mw
Abstract
The significant of intellectual capital to achieving competitive advantage in today’s knowledge-based economy
is undeniable. Companies are depending more on intellectual rather than physical capital. Generation and
exploitation of knowledge is what is playing a predominant part in the process of wealth creation. The study was
aimed at making a longitudinal assessment of the level of intellectual capital in companies listed on the Malawi
Stock Exchange for a five year period 2008-2012. Using the market-to-book value method, the results suggested
that intellectual capital was a significant part of the total value of the listed companies. However, the results
indicated that the value of intellectual capital has been declining significantly over the period, raising concerns
over the long run competitiveness of the companies and the economy as a whole. As such the study recommends
further studies to empirically determine the factors contributing to the decline and the required remedy.
Keywords: Intellectual capital, Malawi Stock Exchange (MSE), Market Capitalization Methods (MCM)
Introduction
In the current knowledge-based economy which is also called new economy or knowledge era, competitive
success depends less on the strategic allocation of physical and financial resources, and more on strategic
management of intellectual capital (Tseng and Goo, 2005). This has prompted considerable interest in
developing appropriate measurement metrics of intellectual capital, reflecting on the maxim that “what gets
measured gets managed” (Mohiuddin et al., 2006). According to Campisi and Costa (2008) measuring the
performance of these intangible assets is strategic to foreseeing with great accuracy the future value of an
enterprise and as a result, it is a gradient of competitiveness in the current knowledge economy. Besides,
Campisi and Costa (2008) pointed out that in order to clearly describe future scenarios of development in
planning; a company has to fully understand its own intellectual potential as only those organisations that
succeed in this intent will maintain a competitive advantage over their competitors.
Despite the broadness and importance of these assets, the current accounting framework, very narrowly defines
intangible assets, by not including assets such as human resources, customer loyalty, company reputation
(Brennan and Connell, 2000). This may be partly due to the rigid requirements of the accounting concepts and
principles developed since the rules of double entry were set up (Gan and Saleh, 2008). Consequently, traditional
accounting measures are inadequate for determining real corporate value in this knowledge-based economy
(Tseng and Goo, 2005). Thus, the traditional accounting methods, which have been portraying the condition of
the companies for half a millennium, are now losing their way at the advent of dynamic changes taking place in
today’s business (Mohiuddin et al., 2006). This is the case, due to the lack of standardized accounting guidelines
on these vital assets, resulting in resources worth thousands of millions going unreported in the annual reports
thwarting the basic motive of true and fair view of financial statements (Singh and Kansal, 2011).
Substantial differences exist between the market and book values of companies (Brennan and Connell, 2000).
Many of these differences can be explained by intellectual capital assets not recognised in company’s balance-
sheets (Brennan and Connell, 2000). Gan and Saleh (2008) pointed out that while some of these differences are
attributable to the current value of physical and financial assets exceeding their historical cost, a large proportion
is due to the rise in the importance of intangible assets. According to Abeysekera (2007) intellectual capital held
by a firm can be thought of as a form of “unaccounted capital” in accordance with the traditional accounting
system terminology and can be described as the knowledge-based equity that supports the knowledge-based
assets of a firm (Abeysekera, 2007).
However difficult it may be in reporting, the importance of intellectual capital information should not be
neglected instead alternative way of reporting should be looked into (Gan and Saleh, 2008). This is the case
because, elements of intellectual capital, if managed properly, have huge potential for creating value hence it is
felt that they can no longer be ignored (Brennan and Connell, 2000). Valuing intellectual capital is important in
enabling the realisation and appreciation of the true value of the companies (Tseng and Goo, 2005; Maditinos et
al., 2009). Valuation is not be done for its sake, but to support effective decision-making. According to Bruggen
et al. (2009); investors have difficulties in accurately assessing the value of the firm for resource allocation using
the financial statements that do not report intellectual capital, similarly managers may find it difficult to
determine relevant intangible investments needed for the company’s operations. April et al. (2003) asserted that:

Vol.6, No.9, 2014
28
“Companies that measure, report and manage their intellectual capital effectively have a competitive
advantage because they have identified all the assets at their disposal (tangible and intangible), and are
thus in a position to operate at their full potential by making maximum use of their asset pool. In
addition, understanding the real value of all assets provides a more accurate reflection of the worth of
a company, which supports the corporate goals of transparency to shareholders, potential investors and
market analysts.”
The objective of the study was to measure the aggregate value of intellectual capital for companies listed on
Malawi Stock Exchange and analyse the changes in value over the five year period. The study provides
empirical evidence of the significant contribution of intellectual capital to firm’s total value. It further informs
and elicits appreciation of intellectual capital particularly to preparers of annual reports generally and also in
Malawi. This is important because despite the crucial role of intellectual capital, its appreciation is still at the
lower end, especially in the eyes of the preparers such as the accountants (Gan and Saleh, 2008). The remainder
of the paper is structured as follows, the second section review the existing literature on intellectual capital and
its measurement methodologies. The third section describes the research methodology employed, followed by
section four that presents the results of analysis and ensuing discussion. Finally section five gives the concluding
remarks.
Literature review
Intellectual capital
Production basically requires both physical and intellectual capital (Goh, 2005). Goh (2005) describes physical
capital as the traditional inputs of land, labour, and capital; and intellectual capital as the knowledge, creativity,
skill and corporate culture. Youndt et al. (2004) further expand the description of intellectual capital not merely
as a catalogue of elements but a sum of all knowledge an organization is able to leverage in the process of
conducting business to gain competitive advantage.
Goh (2005) recognises a shift from neoclassical economies toward knowledge economy. According to Goh
(2005) in neoclassical economies firms emphasize utilisation of physical capital particularly seen in mass
production in the agricultural and industrial sectors. On the other hand, in knowledge economy firms depending
more on intellectual rather than physical capital. It is recognised that the shift in not yet completed, however,
Janosević et al. (2013) suggested that even though corporate success is still achieved through intensive
application of financial and physical capital that is not sustainable in long run. This is a case because slowly but
surely, the traditional management of financial assets and liabilities can no longer ensure competitive advantage
(Tseng et al. 2013), it is the generation and exploitation of knowledge that is playing a predominant part in the
process of wealth creation (Goh, 2005).
Attempts have been made to describe intellectual capital; however as of now there is no generally accepted
description. According to Gan and Saleh (2008) analysis of literature suggests two aspects of intellectual capital.
The first aspect is indicated in the accounting standards which refers intellectual capital to patent, intellectual
property, brand and trademarks. On the other aspect, intellectual capital is seen as the soft asset such as
knowledge, information, and experience. Gan and Saleh (2008) further state that the second aspect forms much
of the intellectual capital today and needs to be further understood and researched.
It must be noted that intellectual capital requires effort to be realised. According to Youndt et al. (2004)
intellectual capital does not naturally develop and evolve rather, targeted managerial investments seemed to be
much more important in building a strong organizational knowledge-base. In so doing Mavridis (2004) posited
that personal and inaccessible liability (intellectual potential) becomes an intangible “intellectual asset” or
simply intellectual capital when the tacit or invisible knowledge leads to practical results. Mavridis (2004)
indicates that the practical results are far reaching as they can be evidenced not only in the creation of “intangible
goods” (such as know-how, licenses, patents, franchises, copyrights, trademarks, software and methods), but also
creation of invisible competences or competitive advantages and lastly real common tangible assets.
Intellectual capital measurement methodologies
According to Saenz (2005) economists have noticed a growing gap between the market value of companies’
shares and their book value. The gap suggests the inadequacy of the traditional accounting as much of it can be
explained by intellectual capital assets not recognised in company’s balance-sheets (Brennan and Connell, 2000).
In an attempt to overcome the inadequacy of the traditional accounting framework in its failure to reflect the
value of intellectual capital, researchers and practitioners have been developing numerous and innovative metrics
and models of intellectual capital reporting (Campisi and Costa, 2008; Bruggen et al., 2009).
In the attempt to understand these measurement methods, authors have endeavored to categorise them.
According to Mavridis (2004) there are two orientations under which measurement methods can be grouped. The
first is the “process orientation” which derives the value of intellectual capital from costs or expenses
particularly by the difference between market and book values. The second being the “value orientation” that
derives the value of intellectual capital from profit or investment returns and their respective drivers. Brennan

Vol.6, No.9, 2014
29
(2001) recognises three measurement approaches. The first approach derives the value from the difference
between market value of the firm and its book value. The second approach uses the Skandia Navigator to
identify and quantify critical success factors in four dimensions of the business. And the final approach merely
measures the efficiency of intellectual assets. On the other hand, Tan et al. (2007) posited that intellectual capital
measuring methods can be grouped broadly under two categories: those that do not use a monetary valuation;
and those that put a monetary value. Tan et al. (2007) further clarifies that the former includes not only methods
that attempt to estimate the dollar values of intellectual capital, but also those that derive the monetary values
through the use of financial ratios.
Campisi and Costa (2008) however consolidated the positions of Brennan (2001), Mavridis (2004) and Tan et al.
(2007). TABLE 1 presents the consolidated profile of the methods proposed by various scholars and institutions
that can be used in measuring intellectual capital presented by Campisi and Costa (2008). TABLE 1 exhibits
twenty-eight measurement methods, indicating that measuring intellectual capital is a very difficult proposition
(Jurczak, 2008). However, Gan and Saleh (2008) posited that despite the reporting difficulties, the importance of
intellectual capital information should not be neglected instead alternative ways of reporting should be looked
into. Thus efforts should still be made that will ultimately lead to clear methodology. Tan et al. (2007)
recognised that the measuring techniques are still evolving. Thus, in evolution stage, questioning the validity of
the method should be made with the purpose of improving measurement and rather than discouraging it.
Due to the wide variety of the measurement methods, process of method selection becomes challenging.
However, Jurczak (2008) opined that selection should be dependent on its purpose, situation and audience. thus
of interest to this current study in line with the research objectives is the market capitalization methods (MCM)
which falls under the cost orientation and involves monetary evaluation of intellectual capital at an aggregate
level. According to Campisi and Costa (2008) MCM tend to compute the difference between a company’s
market capitalization and its stockholders’ equity as the value of its intellectual capital or intangible assets.
As can be observed on TABLE 1, there are four methods under MCM namely: investor assigned market value,
Market-to-book value, Tobin’s q and the invisible balance sheet. Consistent with the objectives, the study
employs market-to-book value method, which is recognised as an effective “yardstick” for measuring intangibles
(Mavridis, 2004). The method measures the value of intellectual capital as the excess of the market value of the
company or stock-market capitalization over its stockholders’ equity (Saenz, 2005). Arguably this “excess” is
the market valuation of the intellectual capital stocks and organizational learning flows of the company
(Sharabati et al., 2010). According to Campisi and Costa (2008) MCM and return on assets methods are the two
broad methods that produce indexes at an aggregate level, useful in making comparisons between enterprises
regarding the efficient management of their intangible assets and monitoring the trends. Furthermore, the method
is recognised to be more useful to external users of accounts (Brennan, 2001).
The method has however some limitations which include the fact that the evaluation of intellectual capital is
totally subject to the financial market (Campisi and Costa, 2008). Furthermore it does not take into account
numerous exogenous factors (macroeconomic conditions, current industrial policies, etc.) indirectly influencing
the company market value and consequently calculated intangible assets value (Campisi and Costa, 2008).
Research methodology
Data collection
The population of the study comprised all the fifteen companies that are listed on the Malawi Stock Exchange
(MSE) over the five year period 2008 to 2012. Table 2 shows the names of all the companies and their
respective sectors. Selection process however excluded Packaging Industries (Malawi) as it was delisted in 2011.
Furthermore Old Mutual Limited was excluded as its primary operating environment is not Malawi. The study
targeted the listed companies operating primarily in Malawi during the entire period. The study therefore
sampled thirteen companies. Data was collected from the reports produced by Malawi Stock Exchange (MSE)
for each of the year under study. The reports were downloaded from the website of MSE.
Intellectual capital measurement method
In order to measure the aggregate value of intellectual capital for each company over the study period, the
market-to-book value method was used consistent with other related studies (Singh and Kansal, 2011; Bayatiani
and Khodamipour, 2013). The study employed the model that was used by Bayatiani and Khodamipour (2013)
given below:
=
−
1 +
Where:
= Intellectual Capital
= Market value of company
= Book value of company

Vol.6, No.9, 2014
30
= The average inflation rate during the (t) period.
According to Tseng et al. (2013) the market value represents the evaluation of capital market on the future
developing potential of the corporation while the book value depicts the present book value of the past
investment as calculated by accounting method.
Paired t-test
Furthermore, in order to test the significance of the differences of the calculated values of intellectual capital
over the period, a paired t-test was perf+ormed using the Statistical Package for Social Studies (SPSS).
Findings and discussion
This section presents the results of analysis and the ensuing discussion. The analysis was made based on the gap
between the market values of the sampled companies and their book values. The gap is recognised as an
explanation of the intellectual capital of the firm (Brennan and Connell, 2000). According to Sharabati et al.
(2010) “excess” is the market valuation of the intellectual capital stocks and organizational learning flows of the
company.
Summary statistics
TABLE 3 presents the summary statistics. The TABLE indicates that in each of the years under the study period,
there was at least one company operating with the market value below its book value. In 2008 there was only one
such company, however the number rose to four in 2009 and stayed the same over the following years. The
TABLE further shows that the minimum values of intellectual capital has always been in negatives and has
declining from negative K435.07 million in 2008 to negative K6,927.45 million in 2012. Similarly the maximum
value of intellectual capital has also has been declining from K71, 397.41 million in 2008 to K66, 589.59 million
in 2012. The decline is also exhibited by the declining average value of intellectual capital over the period from
K13, 487.92 million in 2008 to K6, 490.29 million in 2012. This suggest that although the number of companies
operating with an excess of the market value over the book value has remained constant between 2009 to 2012
period, the excess has been constantly declining.
Proportion of intellectual capital to total value of the companies
FIGURE 1 indicates the proportion of accounted capital i.e. shareholder’s equity and unaccounted capital i.e.
intellectual capital, over the five year period. It can be noted that the intellectual capital was a significant
proportion to the total market value of the listed companies on MSE consistent with Brennan (2001). The
FIGURE reveals the huge value of intellectual capital that has remained unreported in the balance sheet (Singh
and Kansal, 2011), further highlighting the need for the accounting field to develop new quantitative categories
and metrics that reflect precisely organizations’ total capital bases on the balance sheets (Youndt et al., 2004).
Changes of the proportion of intellectual capital
FIGURE 2 shows the percentage changes in the average value of intellectual capital to average book value over
the period. The FIGURE confirms that the proportion of the average value of intellectual capital to average
book value has been declining over the period. It exhibits that the proportion was 311% in 2008 and has declined
to 61% in 2012. Indicating that in 2008, intellectual capital was three times the size of the book value of the firm,
however in 2012 that has declined to less than one. The largest decline was of 49.5% between 2008 and 2009,
followed by a decline of 31% between 2011 and 2012. 2009 and 2010 period registered a fall in value 28% and
the least was of a fall was of 21% between 2010 and 2011.
FIGURE 3 presents the results of the trend analysis of the average market values, average book values and
average intellectual capital values over the period. It shows an upward trend in the average value of book value.
As can be seen on FIGURE 4 book value has been growing between 17% and 41% over the period. On the other
hand, FIGURE 3 indicates declining of the average market value from 2008 to 2010; however 2011 and 2012 it
registered an upward trend. Besides, FIGURE 3 reveals a wide gap between the average market values and
average book values, suggesting the significant quantity of intellectual capital.
However, in relation to trend of average value of intellectual capital, the FIGURE 3 exhibits a perpetual decline
throughout the period. As can also be seen on FIGURE 4 its growth rates have been in negatives. The worse
decline was of 29% in 2009. Improvements can be noted in 2010 (16%) and 2011 (4%) however in 2012 the rate
of decline increased to 17%.
Paired T-Test
To evaluate the significance of the changes in the average value of intellectual capital over the five year period, a
paired T-Test was performed. The results of the test are presented in TABLE 4. The results indicate that changes
in average values of intellectual capital were statistically significant at 5% level (p-values < 0.05) in the
following consecutive years; 2008-2009, 2009-2010 and 2011-2012. However the differences in average values
for 2010-2011 were found not to be statistically significant (p-value > 0.05). This period also exhibited relatively
the lowest decline of the percentage of average intellectual capital to average book value and lowest negative
growth rate (see FIGURE 4).
In summary, the above results suggest significant declining trend in the values of intellectual capital. The decline

Vol.6, No.9, 2014
31
is worrisome considering importance of intellectual capital to the competitiveness of the companies and
consequently of the economy as a whole. More studies are therefore needed to establish whether the decline is
limited to listed companies only or to all other companies in Malawi; hence the study proposes further studies
sampling unlisted companies. On the other hand, the possible explanation for the deteriorating level of
intellectual capital may be the economic hardship that Malawi has been passing through during the period. The
economic hardship originated from a sour relationship between Malawi and the donor community which resulted
in the suspension of donor aid. Severe shortage foreign currencies followed and the other consequential effects
such as severe fuel shortage, lack of imported raw materials resulting in scaling down by manufacturing
companies, downsizing etc. As has been already mentioned, intellectual capital does not naturally develop and
evolve rather, targeted managerial investments are much more important to its growth (Youndt et al., 2004).
These targeted investments can be conscious i.e. where right and well planned actions are made intended to build
the value of intellectual capital. On the other hand, may be unconscious, in the sense that investments may be
planned however the managers are not be aware that they are building intellectual capital, for instance they may
regard them as merely corporate social responsibility. Thus, during this period of economic hardship, managers
of the listed companies may have been forced consciously or unconsciously to neglect or reduce investing in
intellectual assets. The study therefore further proposes studies to empirically determine the factors contributing
to the fall in value of intellectual capital of the listed companies.
Conclusion
Intellectual capital is indisputably essential to achieving competitive advantage for companies in today’s
knowledge-based economy hence; efforts should be made to effectively manage it. Knowledge of the value of
intellectual capital is vital to its management. According to Jurczak (2008) measurements assist in benchmarking,
estimation of their real value, controlling their improvement year by year and improving ways of managing them.
Hence the study has endeavoured to measure intellectual capital in companies listed on Malawi Stock Exchange
using market-to-book value methodology. The results indicate the need for further studies in order to fully
understand intellectual capital in Malawi and ways of enhancing it in order to promote the competitiveness of the
companies and consequently the economy as a whole.
The study had two major limitations. Firstly, the values of intellectual capital were measured using only one
method; market-to-book value which is prone to financial speculations on the capital market (Campisi and Costa,
2008). It is also opined that there is no one method that is credible enough (Jurczak, 2008) as they are all
evolving. Furthermore according to Brennan (2001) the difference between market and book value cannot be
wholly ascribed to intellectual assets as part may relate to unrealistic tangible asset values in firm balance sheets.
Secondly, the sample was small relative the number of companies in Malawi, as there were only fifteen listed
companies on MSE, during the period, hence the results cannot be generalised. Future studies should consider
measuring and comparing values of intellectual capital combining a number of methods. Furthermore, as already
stated future studies should consider a larger sample incorporating companies that are not listed.
References
Abeysekera I. (2007). Intellectual capital reporting between a developing and developed nation. Journal of
Intellectual Capital, 8 (2), 329-345
April K. A., Bosma P. & Deglon D. A. (2003). IC measurement and reporting: establishing a practice in SA
mining. Journal of Intellectual Capital, 4 (2), 165-180
Bayatiani N. N. and Khodamipour A. (2013). Investigating Relationship between Intellectual Capital and
Financial Variables of Companies Listed in Tehran Stock Exchange. International Research Journal of Applied
and Basic Sciences, 4 (4), 825-828
Brennan N. and Connell B. (2000). Intellectual capital: current issues and policy implications. Journal of
Brennan N. (2001). Reporting intellectual capital in annual reports: evidence from Ireland. Accounting, Auditing
& Accountability Journal, 14 (4), 423-436
Bruggen A., Vergauwen P. & Dao M. (2009). Determinants of intellectual capital disclosure: evidence from
Australia. Management Decision, 47 (2), 233-245
Campisi D. & Costa R. (2008). A DEA-Based Method to Enhance Intellectual Capital Management. Knowledge
and Process Management, 15 (3), 170–183
Gan K. & Saleh Z. (2008). Intellectual Capital and Corporate Performance of Technology-Intensive Companies:
Malaysia Evidence. Asian Journal of Business and Accounting, 1 (1), 113-130.
Goh P. C. (2005). Intellectual capital performance of commercial banks in Malaysia. Journal of Intellectual
Capital, 6 (30), 385-396
Janosević S., Dzenopoljac V. & Bontis N. (2013). Intellectual Capital and Financial Performance in Serbia.
Knowledge and Process Management, 20 (1), 1–11

Vol.6, No.9, 2014
32
Jurczak J. (2008). Intellectual Capital Measurement Methods. Economics and organisation of enterprise, 1 (1),
37–45
Maditinos D., Šević Ž. & Tsairidis C. (2009). Intellectual Capital and Business Performance: An Empirical study
for the Greek Listed Companies. [Online] Available:
http://www.researchgate.net/publication/227430845_Intellectual_Capital_and_Business_Performance_An_Empi
rical_Study_for_the_Greek_Listed_Companies/file/60b7d514b490348ce2.pdf.
Mavridis D. G. (2004). The intellectual capital performance of the Japanese banking sector. Journal of
Mohiuddin M., Najibullah S. and Shahid A. I. (2006). An Exploratory Study on Intellectual Capital Performance
of the Commercial Banks in Bangladesh. The Cost and Management, 34 (6), 40-54
Saenz J. (2005). Human capital indicators, business performance and market-to-book ratio. Journal of
Sharabati A. A., Jawad S. N. and Bontis N. (2010). Intellectual capital and business performance in the
pharmaceutical sector of Jordan. Management Decision, 48 (1), 105-131
Singh S. and Kansal M. (2011). Voluntary disclosures of intellectual capital: An empirical analysis. Journal of
Intellectual Capital, 12 (2) 301-318
Tan H. P., Plowman D. and Hancock P. (2007). Intellectual capital and financial returns of companies Journal of
Tseng C. and Goo Y. J. (2005). Intellectual capital and corporate value in an emerging economy: empirical study
of Taiwanese manufacturers. R&D Management, 35 (2), 187-201
Tseng K., Lan Y., Lu H. and Chen P. (2013). Mediation of strategy on intellectual capital and performance.
Management Decision, 51(7), 1488-1509
Youndt M. A., Subramaniam M. and Snell S. A. (2004). Intellectual Capital Profiles: An Examination of
Investments and Returns. Journal of Management Studies, 41, 335-361
Table 1: Methods for measuring intangible assets
Category Approach Methods
Scorecard methods Non-monetary evaluation
Evaluation of single components of the
Intellectual Capital
Topplinjen & business IQ
Danish guidelines
IC rating
Value chain scoreboard
Meritum guideline
Knowledge audit cycle
IC-index
Skandia navigator
Intangible asset monitor
Balance score card
Direct Intellectual
Capital methods
Monetary evaluation
The value explorer
Intellectual asset valuation
Total value creation
Inclusive valuation methodology
Accounting for the future
Technology broker
Citation-weighted patents
HR statement
Human resource costing & accounting
(Johansson)
Human resource costing & accounting
(Flamholtz)
Return On Assets
methods
Monetary evaluation
Knowledge capital earnings
Economic value added
Calculated intangible value
Value added intellectual coefficient
Market Capitalization
Methods
Monetary evaluation
Investor assigned market value
Market-to-book value
Tobin’s q
The invisible balance sheet
Source: Campisi and Costa (2008)

Vol.6, No.9, 2014
33
TABLE 2
List of companies listed on MSE and their sectors 2008 - 2012
No Name of the companies Industry/ Sector
1 Blantyre Hotels Limited Tourism
2 First Merchant Bank Banking
3 Illovo Sugar Agro-processing
4 Malawi Property Investment Co. Limited Property Development
5 National Bank of Malawi Banking
6 NBS Bank Banking
7 NICO Holdings Limited Financial
8 National Investment Trust Limited Investment Trust
9 Packaging Industries (Malawi) Limited* Industrial
10 Press Corporation Limited Conglomerate
11 Real Insurance Limited Insurance
12 Standard Bank Banking
13 Sunbird Tourism Limited Tourism
14 Telekom Networks Limited Telecoms
15 Old Mutual Limited** Financial
* delisted in 2011
**its primary listing is on the London Stock Exchange
(Source: Malawi Stock Exchange)
TABLE 3: Analysis of aggregate value of intellectual capital (IC)
Year Minimum
IC value
K'million
Maximum IC
value
K'million
Average
IC value
K'million
Standard
deviation
Number of Companies reporting excess
of market value over book value (N = 13)
2008 -435.07 71,397.41 13,487.92 19,633.39 12
2009 -3,482.89 60,672.31 9,619.99 16,905.62 8
2010 -3,219.82 61,128.49 8,090.41 17,116.86 8
2011 -5,937.28 69,396.01 7,803.19 19,470.72 8
2012 -6,927.45 66,589.59 6,490.29 18,809.84 8
TABLE 4: Results of Paired Samples Test
Mean Standard Deviation Standard Error Mean t Sig. (2-tailed)
Pair 1 2008 - 2009 3,867.92 5,334.92 1,479.64 2.61 0.023
Pair 2 2009 - 2010 1,529.58 2,474.18 686.21 2.23 0.046
Pair 3 2010 - 2011 287.21 3,029.10 840.12 0.34 0.738
Pair 4 2011 - 2012 1,312.90 2,072.33 574.76 2.28 0.041

European Journal of Business and Management
Vol.6, No.9, 2014
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009
FIGURE 1: Proportion of accounted and unaccounted capital
311%
0%
50%
100%
150%
200%
250%
300%
350%
2008
FIGURE 2: Percentage of average IC to average Book value
2839 (Online)
34
2009 2010 2011 2012
Accounted Capital
Unaccounted Capital
157%
113%
89%
61%
2009 2010 2011 2012
www.iiste.org
Accounted Capital
Unaccounted Capital
61%
2012

Vol.6, No.9, 2014
-
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
2008 2009
FIGURE 3: Trends over the five year period
GR of MV
GR of BV
GR of IC
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
FIGURE 4: Growth rate (GR) in the average value of intellectual capital
(IC), market value (MV) and book value (BV)
2839 (Online)
35
2009 2010 2011 2012
FIGURE 3: Trends over the five year period
Average MV K'million
Average BV K'million
Average IC K'million
2009 2010 2011
GR of MV -14% -4% 9%
GR of BV 41% 17% 22%
GR of IC -29% -16% -4%
40%
30%
20%
10%
0%
10%
20%
30%
40%
50%
(IC), market value (MV) and book value (BV)
www.iiste.org
Average MV K'million
Average BV K'million
Average IC K'million
2012
11%
21%
-17%

A longitudinal assessment of intellectual capital of companies listed on malawi stock exchange

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to A longitudinal assessment of intellectual capital of companies listed on malawi stock exchange

Similar to A longitudinal assessment of intellectual capital of companies listed on malawi stock exchange (20)

More from Alexander Decker

More from Alexander Decker (20)

A longitudinal assessment of intellectual capital of companies listed on malawi stock exchange